Platform Barriers to Entry and the Limits of Data Portability
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Michigan Technology Law Review Article 3 2021 Taking It With You: Platform Barriers to Entry and the Limits of Data Portability Gabriel Nicholas New York University School of Law Follow this and additional works at: https://repository.law.umich.edu/mtlr Part of the Antitrust and Trade Regulation Commons, Consumer Protection Law Commons, Internet Law Commons, and the Science and Technology Law Commons Recommended Citation Gabriel Nicholas, Taking It With You: Platform Barriers to Entry and the Limits of Data Portability, 27 MICH. TECH. L. REV. 263 (2021). Available at: https://repository.law.umich.edu/mtlr/vol27/iss2/3 This Article is brought to you for free and open access by the Journals at University of Michigan Law School Scholarship Repository. It has been accepted for inclusion in Michigan Technology Law Review by an authorized editor of University of Michigan Law School Scholarship Repository. For more information, please contact [email protected]. TAKING IT WITH YOU: PLATFORM BARRIERS TO ENTRY AND THE LIMITS OF DATA PORTABILITY Gabriel Nicholas* Abstract Policymakers are faced with a vexing problem: how to increase competition in a tech sector dominated by a few giants. One answer proposed and adopted by regulators in the United States and abroad is to require large platforms to allow consumers to move their data from one platform to another, an approach known as data portability. Facebook, Google, Apple, and other major tech companies have enthusiastically supported data portability through their own technical and political initiatives. Today, data portability has taken hold as one of the go-to solutions to address the tech industry’s competition concerns. This Article argues that despite the regulatory and industry alliance around data portability, today’s public and private data portability efforts are unlikely to meaningfully improve competition. This is because current portability efforts focus solely on mitigating switching costs, ignoring other barriers to entry that may preclude new platforms from entering the market. The technical implementations of data portability encouraged by existing regulation—namely one-off exports and API interoperability—address switching costs but not the barriers of network effects, unique data access, and economies of scale. This Article proposes a new approach to better alleviate these other barriers called collective portability, which would allow groups of users to coordinate to transfer data they share to a new platform, all at once. Although not a panacea, collective portability would provide a meaningful alternative to existing approaches while avoiding both the privacy/competitive utility trade off of one-off exports and the hard-to- regulate power dynamics of APIs. * Gabriel Nicholas is a Joint Research Fellow at New York University School of Law Information Law Institute and the New York University Center for Cybersecurity, and a Fel- low at the Engelberg Center on Innovation Law & Policy. Thanks to Katherine Strandburg, Aaron Shapiro, Mark Verstraete, Salome Viljoen, Randy Milch, Carrie Brown, and Lucas Daniel Cuatrecasas for their sage guidance. Thank you also to the Yale Law School Infor- mation Society Project conference on Big Tech and Antitrust and the NYU School of Law Privacy Research Group for helping me refine these ideas. Finally, special thanks to Michael Weinberg for introducing me to this topic. 263 264 Michigan Technology Law Review [Vol. 27:263 TABLE OF CONTENTS INTRODUCTION ........................................................................................... 264 I. CURRENT APPROACHES TO DATA PORTABILITY .......................... 269 II. DATA PORTABILITY AND BARRIERS TO ENTRY ............................ 272 A. Switching Costs...................................................................... 272 B. Unique Data Access............................................................... 274 C. Economies of Scale................................................................ 276 D. Network Effects...................................................................... 279 III. ADDITIONAL CONSIDERATIONS FOR API PORTABILITY................ 281 A. Hesitance to Depend on Incumbent APIs .............................. 282 B. Backslide and Undifferentiated Products .............................. 284 C. Opportunities for Creative Destruction................................. 285 IV. COLLECTIVE PORTABILITY—A NEW APPROACH ......................... 287 A. Five Questions for a Collective Data Portability Regime ..... 289 B. Hypothetical Collective Portability Regimes......................... 291 1. Spotify............................................................................. 291 2. iMessage ......................................................................... 292 3. Meme Groups ................................................................. 292 C. Collective Portability and Barriers to Entry ......................... 293 1. Switching Costs .............................................................. 293 2. Unique Data Access........................................................ 293 3. Economies of Scale......................................................... 294 4. Network Effects .............................................................. 294 D. Challenges to Collective Portability...................................... 294 1. Implementation Complexity ........................................... 295 2. Incumbent Resistance ..................................................... 295 3. Content Moderation and Filter Bubbles.......................... 296 CONCLUSION .............................................................................................. 297 INTRODUCTION On March 30, 2019, in response to fomenting anti-Facebook sentiment, Mark Zuckerberg released an op-ed titled, “Four Ideas to Regulate the In- ternet.”1 His first three ideas regarded speech, political advertisements, and privacy. The fourth addressed concerns that Facebook and its ilk had grown too large for any other platform to compete.2 Zuckerberg called for regula- 1. Mark Zuckerberg, The Internet Needs New Rules, Let’s Start in These Four Areas, WASH.POST (Mar. 30, 2019, 3:00 PM), https://www.washingtonpost.com/opinions/mark- zuckerberg-the-internet-needs-new-rules-lets-start-in-these-four-areas/2019/03/29/9e6f0504- 521a-11e9-a3f7-78b7525a8d5f_story.html. 2. See, e.g., Lina Khan, Amazon’s Antitrust Paradox, 126 YALE L.J. 710 (2017); Rob- ert Reich, Break up Facebook (and While We’re at It, Google, Apple and Amazon), GUARDIAN (Nov. 20, 2018, 3:00 AM), https://www.theguardian.com/commentisfree/2018 /nov/20/facebook-google-antitrust-laws-gilded-age; Joe Nocera, Easiest Fix for Facebook: Break It up, BLOOMBERG (Nov. 21, 2018, 11:44 AM), https://www.bloomberg.com/opinion /articles/2018-11-21/fix-facebook-by-breaking-it-up-under-antitrust-regulation. Spring 2021] Taking It With You 265 tion to guarantee the principal of data portability, noting that, “[i]f you share data with one service, you should be able to move it to another. This gives people choice and enables developers to innovate and compete.”3 Zuckerberg’s op-ed signaled a strategic shift in Facebook’s public poli- cy strategy. Instead of fighting to keep Facebook data within the walls of the platform,4 Facebook would allow for “data portability”—the ability for us- ers to move their data from one service to another. It was an instrument of self-regulation that responded directly to mounting calls for antitrust action.5 In the same way that the free movement of capital allows for competitive markets, so too would the free movement of data allow for competitive plat- forms, at least in theory.6 Facebook was not alone in adopting this ap- proach—Apple, Google, Microsoft, and Twitter all included data portability in their competition policy efforts.7 Data portability was also part of the ACCESS Act,8 introduced by Senators Warner, Hawley, and Blumenthal seven months after Zuckerberg’s op-ed, to improve competition in the tech sector.9 Although data portability laws already exist in California, the European Union, and Singapore,10 they are not primarily aimed at improving tech sec- 3. Zuckerberg, supra note 1. 4. See generally Mark Andrejevic, Privacy, Exploitation, and the Digital Enclosure, 1 AMSTERDAM L.F. 47 (2009); Kevin Bankston, How We Can ‘Free’ Our Facebook Friends, NEW AMERICA (June 28, 2018), https://www.newamerica.org/weekly/edition-211/how-we- can-free-our-facebook-friends. 5. Recent antitrust stirrings indicate that the government is interested in increasing competition among tech companies, particularly Alphabet, Amazon, Facebook, and Apple, which are all facing antitrust scrutiny by the Justice Department and other federal and state organizations. See Daisuke Wakabayashi et al., 16 Ways Facebook, Google, Apple and Ama- zon Are in Government Cross Hairs,N.Y.TIMES (Sept. 9, 2019), https://www.nytimes.com /interactive/2019/technology/tech-investigations.html. 6. See generally VICTOR MAYER-SCHÖNBERGER &THOMAS RAMGE, REINVENTING CAPITALISM IN THE AGE OF BIG DATA (2018); Peter Swire, Markets, Self-Regulation, and Government Enforcement in the Protection of Personal Information, in Privacy and Self- Regulation in the Information Age, DEP’T OF COM. (June 1997), https://papers.ssrn.com /abstract=11472. 7. The Data Transfer Project is a joint framework intended to make it easier for com- panies to let users port their data between. It is an open source project being led by Apple, Facebook, Google, Microsoft,